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HMRC internal manual

VAT Transport

HM Revenue & Customs
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Zero-rating of passenger transport: Position before 1 April 2001

Prior to 1 April 2001 it was a requirement that vehicles, ships or aircraft were designed or adapted to carry twelve passengers rather than the current ten. This number was reduced to bring the VAT Act in line with other Government legislation, namely the Public Passenger Vehicle Act 1981 and the Vehicle Excise and Registration Act 1994.

The legislation refers to vehicles, ships and aircraft. Given the context, and the legal reference to ships and aircraft. the term vehicles must be taken to be referring to land transportation. Certain elements of the transport law and policy may apply only to vehicles or to ships or to aircraft so it is important to note this distinction. However, in other parts of the VAT Act 1994 and in the Principal VAT Directive 2006/112 vehicles may be used as a generic term including ships and aircraft.